All posts tagged Tomi Kilgore

One way to see the Dow Jones Industrial Average’s long-term trend amid all the daily noise–made louder recently by every headline about fiscal-cliff talks–is to zoom out to a monthly chart.

That view suggests that, going into the new year, the nearly four-year uptrend is still intact but starting to show definite signs of tiring.

As noted on the Market Technicians Association’s Knowledge Base website, one of the major tenets of the Dow Theory of market analysis, which has maintained its relevance among Wall Street traders for more than a century, is: “A trend is assumed to be in effect until it gives definite signals that it has reversed.”

On a monthly chart, the Dow is still holding well above an uptrend line starting at the March 2009 low of 6469.95. Until this trendline breaks, investors should assume the long-term trend is still up. The Dow recently rose 43 points, or 0.3%, to 12980. The uptrend line currently extends to about 12180, and is rising by about 127 points a month.

The S&P 500 slid past the key 1420-to-1425 support level — a sign the broad “uptrend” in place since the summer has been undone.

In a sudden shift in stance, Wall Street traders are now liable to be more worried about capital preservation–and where their calculators tell them the next technical retracement target is–than the potential consequences of fighting the Federal Reserve.

There’s a trading maxim followed by many on Wall Street: All the fundamental homework should be done before a position is put on. Once the trade is made, it’s all about making smart decisions about whether to let profits ride or take some money off the table.

Whether bulls believe a new long-term downtrend has started or not, it would be unwise to watch the market slide through an important technical threshold and do nothing.

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A rout in raw materials has helped drive down holdings in a Carlye Group firm’s flagship fund from about $2 billion to less than $50 million. The collapsing commodities market is spreading pain well beyond specialists to some of the heaviest hitters on Wall Street.